Another Fed "Taper" Casualty: Kazakhstan Devalues Currency To Weakest On Record

With only $24.5 billion left in FX reserves after valiantly defending major capital outflows since the Fed's Taper announcement, the Kazakhstan central bank has devalued the currency (Tenge) by 19% - its largest adjustment since 2009. At 185 KZT to the USD, this is the weakest the currency has ever been as the central bank cites weakness in the Russian Ruble and "speculation" against its currency as drivers of the outflows (which will be "exhausted" by this devaluation according to the bank). The new level will improve the country's competitiveness (they are potassium heavy) but one wonders whether, unless Yellen folds whether it will help the outflows at all. The Kazakhstan stock index is up 12% on the news...

Via Bloomberg,

The tenge, introduced in 1993 after the breakup of the Soviet Union two years earlier, weakened the most against the dollar last month since July. Kazakhstan devalued its currency by 21 percent in February 2009, as the biggest energy producer in central Asia spent billions of dollars to support the economy and bail out its biggest lenders following the collapse of Lehman Brothers Holdings Inc.

...

“The devaluation was a surprise for many people, considering the central bank’s assurances that the exchange rate is stable,” Damir Seisebayev, director of the analytical department at ?? Private Asset Management in Almaty, said by e-mail. “But you have to be realistic. What is the tenge? It’s the ruble rate multiplied by five. This is a tested formula.”

...

The Kazakhstan Stock Exchange gained 12 percent after the announcement, data on the bourse’s website show.

So it must be great news, right? Just as Venezuelan stock holders...

“The move reflects a combination of factors, including the steady deterioration in the current-account position, worries over the impact of weak growth in Russia and the ruble’s managed depreciation,” Tim Ash, chief emerging-markets economist at Standard Bank Group Plc. in London, said in a note today.

Kazakstan; the country that invented Apples; the real apples that grow on trees; it's an interesting story. Sounds like their currency is suffering from the hot capital sloshing around the world thingy. Lucky thing they aren't in the Euro; Greece used to just devalue every twenty years or so and stayed out of the newspapers; if you're part of somebody's monetary experiment; and you can't devalue you just have to keep pretending until pieces start to fall off.

So the American taxpayer has been propping up entire 3rd world economies? Fuck me, the Matrix boggles the mind. The world will go down sooner or later under the weight of its own arrogance and stupidity.

bernanke is a criminal, to be sure, but it's not like this trainwreck was set in motion on his watch. He didn't come up with, or start this current version of debt money loaned into existence with interest Ponzi scheme. He was merely keeping that system affloat for another period of time. People of the "we should have just taken our medicine in 2008" mindset are off by a few decades.

Krid,....Read what I wrote. There was a liquidity crisis after Lehman. QE1 was appropriate. After QE1, they should have used the FDIC to re-package the TBTF Banks that failed, fixed these banks with printed money and IPOed these new entities to the public. In this process, the documents would have been discovered and the crimminals jailed. The Fed's balance sheet would have been flooded with bad mortgages, oh, but this is the current situation, so this must be ok.

Bernanke covered for his bosses pure and simple. You are right, this is the Fed chairmans' job after Volcker. I still like to believe Volcker was different, but I am probably wrong.

In USA dollars, Kazakhstan stock market dropped 7%. You must remember all commodities, including oil, are priced in USA dollars. International Trading Parties can choose any currency they want, but USA dollar has historically been the currency that minimizes currency risk between the Parties. The USA Banking System, or more specifically TBTF Banks, and Ben Bernanke have put everyone at risk over the largest fraud the world has ever witnessed. The TBTF Banks used the credibility of the United States of America to sell known worthless paper and Ben Bernanke lead the cover-up through QE. NO ONE WENT TO JAIL!

Back to Kazakhstan, the citizens of the state dependent on imports are 19% worst off and Kazakhstan exporters received a huge increase in their margins.